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QUESTIONCompare and contrast the tasks involved in recruiting new customers and new franchisees

Aussie Pooch Mobile Lorelle Frazer After creating a mobile service that washes dogs outside their owners' homes, a young entrepreneur has successfully franchised the concept. Her firm now has almost 200 franchises in many parts of Australia as well as up to 30 in other countries. She and her management team are debating how best to plan future expansion laine and Paul Beale drew up in their four-wheel drive Exhibit 1: Christine Taylor with dogs. with red and white lettering. As Aussie Pooch Mobile franchisees whose territory covered four suburbs of Brisbane, Australia, they were having a busy day. It was only 1 p.m., and they had already washed and groomed 16 dogs at 12 different houses. Now they were at their last appointmenta pooch party" of 10 dogs at Number 22, where five other residents of the street had arranged to have their dogs washed on a bi-weekly basis. Prior to their arrival outside the house, there had been ferocious growling and snarling from a fierce-looking Rottweiler. However, when the animal caught sight of the brightly colored trailer, he and two other dogs in the yard bounded forward eagerly to the chain-link fence in a Aurry of barking and wagging tails. Throughout the residential areas of Brisbane and in a number animals and learned dog-grooming skills from working in a local of other Australian cities, dogs of all shapes and sizes were being salon. At 16, Taylor left school and began her own grooming washed and groomed by Aussie Pooch Mobile franchisees. By business on a part-time basis using a bathtub in the family mid-2015, the company had grown to over 165 franchisees garage. As she was still too young to drive, her parents would and claimed to be "Australia's premier mobile dog wash and take her to pick up the dogs from their owners. She washed care company." A key issue facing its managing director, and groomed the animals at home and then returned them. Christine Taylor, and members of the management team was how to plan and shape future expansion (see Exhibit 1). Once Taylor had learned to drive and bought her own car, she decided to take her service to the customers. So she went mobile, creating a trailer in which the dogs could be washed FOUNDING AND EXPANSION outside their owners' homes. She named this fledgling venture "The Aussie Pooch Mobile." Soon, it became a full-time job. Located in Burpengary, Queensland, just north of Brisbane, Eventually, she found that she had more business than she could Aussie Pooch Mobile Pty Ltd (APM) was founded in 1991 by handle alone, so she hired assistants. The next step was to add Christine Taylor, then aged 22. Taylor had learned customer a second trailer. Newly married, she and her husband David service early, working in her parents' bait-and-tackle shop McNamara ploughed their profits into the purchase of addicional from the age of eight. Growing up in an environment with trailers and gradually expanded until they had six mobile units. dogs and horses as pets, she knew she wanted to work with The idea of franchising came to Taylor when she found herself physically constrained by a difficult pregnancy: 2016 by Lorelle Frazer, Director of Online and Blended Leaming. Griffith Business School. This case is an adaptation and updated version of a case David would go bike riding or head to the coast and previously published by Christopher Lovelock and Lorelle Frazer. have fun with the jet ski and I was stuck at home CASE and felt like I was going nuts, because I'm a really in Victoria, 14 in South Austras active person. I was hungry for information on how and 8 in the Australian Capital Territory. The Aussie Pooch to expand the business, so I started researching other Mobile group bathed more than 20,000 dogs each month companies and reading heaps of books and came up and had an annual turnover of approximately $7.5 million. with franchising as the best way to go, since it would provide capital and also allow a dedicated group of small Aussie Pooch Mobile was a member of the Franchise Council business people to help expand the business further. of Australia and complied with the Franchising Code of Conduct. The management team consisted of Christine As existing units were converted from employees to franchisee Taylor as the managing director and David McNamara as the operations, Taylor noticed that they quickly became about director responsible for overseeing trailer design and systems 20% more profitable. Initially, Aussie Pooch Mobile focused on support. Each state had its own manager and training team. Brisbane and the surrounding region of southeast Queensland. The central support office also housed staff who provided Subsequently, it expanded into New South Wales and South further assistance to managers and franchisees. Australia in 1995; Canberra, Australian Capital Territory (ACT) in 1999; and Victoria in 2000 (Exhibit 2). Expansion Aussie Pooch Mobile's expansion benefitted from the leverage into Western Australia came in mid-2004. provided by several master franchisees who had obtained the rights to work a large territory and sell franchises within it. In 1996, a New Zealand division of the firm was launched in Said Taylor: Tauranga, a small city 200 km southeast of Auckland, under the name Kiwi Pooch Mobile. In 2000, Taylor expanded I look at the business as if it's my first child. I see operations into New Caledonia through a master franchise it now starting to come of age where it wants to go agreement, launching "La Pooch Mobile." In 2001, The Pooch alone, but still needs me to hold its hand a little bit, Mobile was launched in the United Kingdom, beginning with whereas initially it needed me there the whole time. a town in northern England. Soon, there were four operators With the support staff we have in place, the business under a master franchisee. The following year saw the official is now gaining the support structure it needs to work launch of The Pooch Mobile Malaysia, also under a master without me. This is what I am aiming towards. I franchisee. When setting up the company's presence in the appreciate that a team of people can achieve much United States in 2006, Taylor offered the master franchise more than one person alone. to a top-performing Australian master franchisee to provide them with further opportunities to grow. By mid-2015, the company had 167 mobile units in Australia, THE SERVICE CONCEPT with 60 located in Queensland, 52 in New South Wales, 19 Unlike retail per service stores that required customers to bring their animals to the store or kennel, Aussie Pooch Mobile Exhibit 2: Map image. specialized in taking its dog washing services to customers' homes. Dogs were washed in a hydrobath installed in a specially designed trailer that was parked in the street. The trailer had partially open sides and a roof to provide protection from sun and rain (Exhibit 3). The use of hydrobath equipment (in which warm, pressurized water was pumped through a shower head) enabled operators to clean dogs more thoroughly than would be possible with a garden hose. The bath was designed to rid the dog of fleas and ticks, improve its skin condition, clean its coat, and eliminate smells. Customers supplied water and electrical power. Apart from flea-control products and a few grooming aids, Aussie Pooch Mobile did not attempt to sell dog food and other pet supplies initially. The company had resisted the temptation to diversify into other fields so that it could CORAL SEA; 14A New Caledonia OCEANIA WITHON Darwis AORTHERN TERRITORY OLEENSLANDS Dertya SOUTH WESTERN AUSTRALIA AUSTRAUA NEW South WALES See More NEWS TERUS AUSTRALA Adelantoram. Am TASMANIA Gullher Perth Albany Senaces offered in 1990 Hydrobath Brush Nail cut Ear clean Eye clean Chamois dry Deodorize Own brand solutions Services offered in 2014 Hydrobath Brush Nail cut Ear clean Eye clean Chamois dry Deodorize Own brand solutions (expanded) Blow dry Retail own-brand products Retail products Medicated washes De-worming Massage for dogs Aromatherapy for dogs Doggy facials Clipping (hair cutting) focus on its niche in the dog-bathing industry. We did not A SATISFIED CUSTOMER want to be a jack of all trades because you'll never be good at anything." declared Taylor. We now have an exclusive The process of bathing a dog involved a sequence of carefully range of products that customer demand has driven us to coordinated actions, as exemplified by Elaine Beal's treatment providing, but we still work closely with vers and pet shops of Zak the Rottweiler. "Hello my darling, who's a good boy?" and are by no means a pet shop on wheels. We are more like crooned Elaine as she patred the enthusiastic dog, placed him a specialist dog care service that provides needed items with on a leash, and led him out through the gate to the footpath on professional advice." this warm, sunny day. Paul busied himself connecting hoses and electrical cords to the house, while Elaine began back-combing The fee paid by customers varied from $22-$70 per dog, Zak's coat in order to set it up for the water to get underneath. depending on breed and size, condition of coat and skin, She then led che now placid dog to the hydrobath inside the behavior, and geographic location, with discounts for multiple trailer, where he sat patiently while she removed his leash and animals at the same address. At "pooch parties," a concept clipped him to a special collar in the bath for security. Meanwhile, developed at Aussie Pooch Mobile, the home owner acting the water had been heating to the desired temperature. as host typically received a discount on their dog wash at the discretion of the operator. Additional services, for which Over the next few minutes, Elaine bathed the dog, applied an extra fee was charged, included aromatherapy baths, a medicated herbal shampoo to his coat, and rinsed him doggy facials, and doggy massages. These services ranged thoroughly with the pressure-driven hose. After releasing From $4-$10. Additional dog grooming and clipping were Zak from the special collar and reattaching his leash, she led available for $10-$50 per dog, depending on the breed and him out of the hydrobath and onto the footpath, where she condition of the animal. wrapped him in a chamois cloth and dried him. Next, she cleaned the dog's cars and eyes with disposable baby wipes, all Operators also offered free advice to customers about their the time continuing to talk soothingly to him. She checked Elogs' diet and health care, including such issues as ticks and his coat and skin to ensure that there were no ticks or skin skin problems. They encouraged customers to have their dogs problems, gave his nails a quick clip, and sprayed a herbal Sathed on a regular basis. Most customers made appointments conditioner and deodorizer onto Zak's now gleaming coat Once every two or four weeks. and brushed it in. Returning Zak to the yard and removing LULJ the leash, Elaine patted him and gave him a large biscuit, services, of which 30% went to dog food, 37% to veterinary specially formulated to protect the animal's teeth. services, 15% to dog products and equipment, and 17% to other services, including washing and grooming (Exhibit 5). THE AUSTRALIAN MARKET Australia's population of 23.7 million in 2015 was small in FRANCHISING IN AUSTRALIA relation to the country's vast land area of 7.7 million km. A Australia was home to a number of internationally known federal nation, Australia is divided into six states--New South franchise operators, including Hertz Rent-a-Car, Avis, Wales (NSW), Victoria, Queensland, South Australia, Western McDonald's, KFC, Pizza Hut, Subway, Kwik Kopy, and Australia, and the island of Tasmania-plus two territories: Snap-on Tools. By contrast, most Burger King outlets operated the large but thinly populated Northern Territory and the under the name Hungry Jack's, an acquired Australian chain small Australian Capital Territory (ACT), which contained with significant brand equity. the federal capital, Canberra, and its suburbs. The average annual earning for employed persons was $77,000. By the beginning of the 21st century, the Australian franchising sector had reached a stage of carly maturity. McDonald's, With much of the interior of the continent uninhabitable and KFC, and Pizza Hut opened their first outlets in Australia in many other areas inhospitable to permanent settlement, most the 1970s. These imported systems were followed by many of the Australian population was concentrated in a narrow home-grown business-format franchises such as Just Cuts coastal band running clockwise from Brisbane on the southeast (hairdressing), Snap Printing, Eagle Boys Pizza, and VIP Home coast through Sydney and Melbourne to Adelaide, the capital Services. All of these grew into large domestic systems and of South Australia. Some 2,700 km (1,600 miles) to the west then expanded internationally, principally to New Zealand lay Perth, known as the most isolated city in the world. A and Southeast Asia. breakdown of the population by state and territory is shown in Exhibic 4. The northern half of the country was in the tropics; In 2014, Australia boasted more than 1,100 business-format Brisbane and Perth enjoyed a sub-tropical climate; and the franchise systems holding an estimated 79,000 outlets. remaining major cities had a temperate climate. Melbourne Although the United States had many more systems and was known for its sharp fluctuations in temperature. outlets, Australia had more franchisors per capita, reflecting the relative ease of entry into franchising in this country. There were about 3.4 million domestic dogs in the country in 2009, and approximately 36% of the nation's eight million Most of the growth in franchising occurred in business-format households owned at least one dog. Western Australia had the franchising as opposed to product franchising. Business-format lowest proportion of dogs per population, while Tasmania franchises provided franchisees with a full business system had the highest. In 2011, it was estimated that Australians and the rights to operate under the franchisor's brand name, spent approximately $3.6 billion on dog-related goods and whereas product franchises merely allowed independent operators to supply a manufacturer's product (such as car Exhibit 4: Population of Australia by State and Territory, dealerships or soft-drink bottlers). March 2011 Exhibit 5: Distribution of consumer expenditures on dog-related goods and services, 2010. Allocation 31% Stute/Territory Population (100) New South Wales 7,618.2 Victoria 5,938.1 Queensland 4,779.4 South Australia 1,698.6 Western Australia 2,591.6 Tasmania 516.6 Australian Capital Territory 390.8 Northern Territory 244.6 Australia Total 23,781.2 Source: Australian Bureau of Statistics, 2015. Product/Service Dog food Vet charges Dog services Pet purchases Total dog-related expenditure 44% 21% 4% $3.6 billion Source: Australian Companion Animal Council, Contribution of the Pet Care Industry to the Australian Economy, Report, 7th ed. (2010). 3.4 0.6 Typically, franchisees were required to pay an up-front franchise Exhibit 6: Distribution of franchise systems in Australia by industry. fee (averaging $30,000 in service industries and $40,000 in retailing) for the right to operate under the franchise system Bezpentage within a defined geographic area. This initial fee was included Retail trade 27.1 in the total start-up cost of the business (ranging from around Accommodation and food services (includes food 18.1 $89,000 in the service sector to more than $275,000 in the retail, fast food, coffee shops, etc.) retail industry). In addition, franchisees paid a royalty on all Administration and support services (includes 14.7 sales and an ongoing contribution toward advertising and travel agencies, office services, domestic and promotional activities designed to build brand awareness and industrial cleaning, gardening services, lawn mowing, etc.) preference. Would-be franchisees who lacked sufficient capital Other services (includes personal services, pet 10.5 might be able to obtain bank financing against personal assets services, auto repairs and servicing, IT services, etc.) such as property or an acceptable guarantor. Education and training 6.9 Rental, hire, and real-estate services 6.4 Arts and recreation services FRANCHISING TRENDS Financial and insurance services 3.3 2.9 The rapid growth of franchising globally had been stimulated Professional, scientific, and technical services Construction 2.1 in part by demographic trends. For instance, the increase in dual-income families had led to greater demand for Transport, postal, and warehousing 1.2 outsourcing of household services such as lawn mowing, Information media and telecommunications 1.0 house cleaning, and pet grooming. Some franchise systems Healthcare and social assistance 1.0 offered multiple concepts under a single corporate brand Wholesale trade name. An example was VIP Home Services, which had Manufacturing 0.4 separate franchises available in lawn mowing, cleaning, car 0.4 washing, and rubbish removal. Additional growth came from Electricity, gas, water, and waste services Total 100.0 conversion of existing individual businesses to a franchise format. For instance, Eagle Boys Pizza had often approached Source: Franchising Australia 2014, Asia-Pacific Centre for local pizza operators and offered them the opportunity to Franchising Excellence, Griffith University. join this franchise. Almost half the franchise systems in Australia were in retail trade (27% non-food and 18% food). Other large and growing industries were administration and Master franchising arrangements had become common in support services (15%) and other services (11%), as shown Australian franchise systems. Under master franchising, a in Exhibit 6. Most franchisees were former white-collar local entrepreneur was awarded the rights to sub-franchise workers or blue-collar supervisors who craved independence the system within a specific geographic area, such as an entire and a life-cycle change. state. Due to Australia's vast geographic size, it was difficult for a franchisor to monitor franchisees who were located far Over the years, Australia's franchising sector had experienced from the head office. The solution was to delegate many of the a myriad of regulatory regimes. Finally, in 1998, in response tasks normally handled by the franchisor to master franchisees to perceived problems in many franchising systems, the instead. This made them responsible for recruiting, selecting, federal government introduced a mandatory Franchising training, and monitoring franchisees in their territories as well Code of Conduct, administered under what is now the as overseeing marketing and operations. Competition and Consumer Act 2011 (formerly the Trade Practice Act). Among other things, the Code required that Not all franchisees proved successful, and individual outlets potential franchisees be given full disclosure about the periodically failed. The main reasons for failure appeared to franchisor's background and operacions prior to signing a be poor choice of location or territory and a franchisee's own franchise agreement. In contrast, the franchising sector in shortcomings. In addition to the technical skills required in the United States faced an inconsistent set of regulations that a given field, success often hinged on the franchisees' sales varied from one state to another. In the United Kingdom, and communication abilities. Disputes in franchising were there were no specific franchising regulations beyond those not uncommon but could usually be resolved internally applying to all corporations operating in designated industries. without recourse to legal action. The causes of conflict most MUSSIT CASE a frequently cited by franchisees related to tranchise tees and alleged misrepresentations made by the franchisor. By contract, purchase cost franchisors cited conflicts based on lack of compliance with Item Cost (2015) the system by franchisees. Initial training $2,500.00 Initial franchise fee and documents 803.88 FRANCHISING STRATEGY AT Guaranteed income 4,800.00 AUSSIE POOCH MOBILE Exclusive territory plus trailer registration 10,900.00 Fixtures, fittings, stock, insurance, etc.: 12,064.30 New Aussie Pooch Mobile franchisees were recruited through Aussie Pooch Mobile trailer and hydrobath 2,000.00 newspaper advertisements and advertorials as well as by word Consumables (shampoo, conditioner, etc.) 350.00 of mouth. The concept appealed to individuals who sought to become self-employed on their own. Interested individuals Retail products 300.00 14,714.30 were invited to meet with a representative of the company Insurance 2,000.00 to learn more. If they wished to proceed further, they had Initial advertising 100.00 to complete an application form and submit a refundable Communications levy deposit of $250 to hold a particular area for a maximum of Total franchise cost (excluding GST) $35,818.18 four weeks. During this period, the applicant could further investigate the characteristics and prospects of the designated territory. The fee was credited to the purchase cost of the parents who were willing to buy them a franchise and set franchise if the applicant decided to proceed or returned if them up with a job. However, in fact, only about half of all the applicant withdrew the application. A new franchise in franchisees were aged 21-30. 40% were aged 31-40, and 2015 cost $35,820, excluding the federal goods and services 10% were in their forties or fifties. About 60% were female. tax (GST) (up from $34,700 in 2010, $24,000 in 2002, and $19,500 in 1999). Exhibit 7 identifies how Aussie Pooch Potential franchisees were offered a trial work period with an Mobile costed out the different elements. operator to see if they liked the job and were suited to the business. They were also required to have good skills with animals and people as well as sufficient physical fitness. SELECTION REQUIREMENTS FOR PROSPECTIVE FRANCHISEES HOW THE FRANCHISE WORKED Aussie Pooch Mobile had set a minimum educational requirement In return for the franchise fee, successful applicants received of passing Year 10 of high school (or its equivalent) for the rights to a geographically defined franchise, typically prospective franchisees. Taylor noted that successful applicants comprising about 12,000 homes. Franchisees also obtained tended to be outdoors people who shared four characteristics: an Aussie Pooch Mobile trailer with all the necessary products and solutions to service the first 100 dogs, plus red uniform They are motivated and outgoing. They love dogs, and shirts and caps, advertising material, and stationery. The trailer they want to work for themselves. Obviously, being great was built to industrial-grade standards. Its design included with dogs is one part of the businessour franchisees many refinements developed by Aussie Pooch Mobile in understand that the dog's even an extended member of the consultation with franchisees to simplify the process of dog customer's familybut it's really important that they can washing and enhance the experience for the animal. Operators handle the bookwork side of the business as well, because were required to travel with a mobile phone, which they had that's basically where your bread and butter is made. to pay for themselves. Other desirable characteristics included people skills, patience, In addition to franchised territories, Aussie Pooch Mobile had and a good telephone manner. Would-be franchisees also approximately 30 company-owned outlets. These were operated required a valid driver's license, access to a vehicle that was by representatives who leased the territory and equipment capable of towing a trailer, and the ability to do this type of and in return paid the company 25% of the gross weekly driving in an urban setting. Originally, Taylor had expected revenues (including GST). The reps were generally individuals that most franchisees would be relatively young people with who either could not afford the start-up cost at present or who were evaluated by the company for their suitability as share ideas among themselves. However, a team leader kept franchisees. Typically, reps either became franchisees within an eye on things to ensure that the forum remained positive. about twelve months or left the company. Each franchisee was assigned to a franchise area development manager (FADM). The FADM facilitated communications between franchisees and the support office. Face-to-face ASSISTING FRANCHISEES, OLD contact, group meetings, phone conversations, and e-mail AND NEW exchanges allowed regular interaction and the discussion of different issues within the company. The FADMs undertook The franchisor provided two weeks' pre-opening training bi-annual training to help improve systems and communications for all new franchisees. Representatives also spent time with within the franchise. They were provided with strategies and each franchisee to help them open their new territories. training to help support their groups and ensure that all their Training topics included operational and business procedures , key performance indicators (KPIs) were met. effective use of the telephone, hydrobathing techniques, dog grooming techniques, and information on dog health FEES and behavior. Franchisees were given a detailed operations manual containing instructions on running the business in In return for these services and support from the franchisors, accordance with company standards. franchisees paid a royalty fee of 10% of their gross weekly income, plus $34 (including GST) flat fee per week. Prior to To help new franchisees get started, Aussie Pooch Mobile 2014, franchisees had to pay an advertising levy of 2.5% instead placed advertisements in local newspapers for a period of the flat fee component. Income was reported on a weekly of 10 weeks. It also prepared human interest stories for basis, and fees had to be paid weekly. In addition to these fees, distribution to these newspapers. Advertising on Facebook, operating costs for a franchisee included car-related expenses and Google AdWords, and other websites was carried out. purchase of consumable products such as shampoo, insurance, Other promotional activities at the time of launch included telephone, and stationery. Exhibit 8 shows the average weekly distribucing pamphlets in the territory and writing to local costs that a typical franchisee might expect to incur. vets and pet shops to inform them of the business. Aussie Pooch Mobile guaranteed new franchisees a weekly income Franchisees often included several couples (like the Beals). of $600 for the first eight weeks and paid for a package of However, Taylor believed that although having two operators insurance policies for six months, after which the franchisee work together could be companionable, it was not really became responsible for the coverage. efficient. Paul Beal, a retired advertising executive, had other interests and did not always accompany Elaine. Some couples Ongoing support by the franchisor included marketing split the work, with one operating three days a week and the efforts, Facebook networking within their area, monthly newsletters, a telephone hotline service for advice, an insurance package, regular (bur brief) field visits, and Pooch Mobile franchisee based on $55,000 turnover. Exhibit 8: Average annual operating expenses for an Aussie additional training. If a franchisee fell sick or wished to take a vacation, Aussie Pooch Mobile would offer Expensie Categories advice on how to deal with this situation best. Wherever Consumable products $2,880 possible, it would provide a trained person to help out. It also organized periodic meetings for franchisees in Car registration the major metropolitan areas, at which guest presenters Car insurance spoke on topics relating to franchise operations. Previous Fuel 3,360 guest speakers included veterinarians, natural therapists, Insurances 1,151 pharmacists, and accountants. Once a year, a conference Repairs and maintenance 1,104 with trade stalls and guest speakers from within as well as Phones, stationery, etc. 1,920 outside the group was organized. New products, systems, Communications levy and services were introduced at this conference. Franchise royalties 5,500 To further support individual franchisees, Aussie Pooch Flat fee Mobile created a Facebook forum, allowing operators to $19,076 Gst 430 500 624 1607 Total LUIS VU other three or even four days. All franchisees were required DEVELOPING A TERRITORY to be substantially involved in the hands-on running of the business. Some had more than one territory and employed Obtaining new customers and retaining existing ones was additional operators to help them. an important aspect of each franchisee's work. The brightly colored trailer often attracted questions from passers-by and presented a useful opportunity to promote the service. Operators could ask satisfied customers to recommend the ADVERTISING AND MARKETING service to their friends and neighbors. Encouraging owners Aussie Pooch Mobile had a national website and Facebook to increase the frequency of washing their dogs was another page and paid for Google AdWords to promote the national way to build business. Knowing that a dog might become website. It promoted a single telephone number staffed lonely in the absence of its owner and could even develop by an answering service 24 hours a day, seven days a week behavioral problems, Elaine Beal sometimes recommended the throughout Australia. Customers only had to pay a local acquisition of a companion pet." As Paul remarked, Having call charge of 25 cents to access this number. They could two dogs is not twice the trouble, it halves the problem!" leave their name and telephone number, which would then be electronically sorted and forwarded via alphanumeric However, to maximize profitability, franchisees also had to pagers to the appropriate franchisee. The franchisee would operate as efficiently as possible, minimizing time spent in then return the call to arrange a convenient appointment non-revenue producing activities such as travel, set up, and time. Customers could also send a message directly to an socializing. As business grew, some franchisees employed operator from the website. additional operators to handle the excess workload. This allowed the trailer to be in service for extended hours seven Aussie Pooch Mobile offered its franchisees expert advice on days a week. Eventually, a busy territory could be split, with local advertising and promotions. It also made promotional a portion sold off to a new franchisee." products and advertising templates available to franchisees and encouraged them to set up their own Facebook pages. Other Aussie Pooch Mobile encouraged this practice. The company corporate communications activities included maintaining the had found that franchisees reached a comfort zone at about website (www.aussiepm.com.au); distributing public relations 50 to 80 dogs a week, after which their business stopped releases to the media, and controlling all aspects of corporate growing as they could not physically wash any more dogs, identity, such as trailer design, business cards, and uniforms. Franchisees could set their own price when selling all or part of a territory, and Aussie Pooch Mobile helped them to "I try to hold the reins pretty tightly on advertising matters,"coordinate the sale. When a territory was split, a franchisec said Taylor. Aussie Pooch Mobile's franchise agreement was usually motivated to rebuild the remaining half to its required individual franchisees to submit their plans regarding maximum potential. promotional activity for corporate approval. Taylor shook her head as she remembered an early disaster involving an unauthorized campaign by a franchisee who had placed an COMPETITION offer of a free dog wash in a widely distributed coupon book. Although many dog owners had traditionally washed their Unfortunately, this promotion had set no expiration date or animals themselves (or had not even bothered), there was geographic restriction, with the result that customers were still a growing trend toward paying a third party to handle presenting the coupon more than a year later across several this task. Dog washing services fell into two broad groups. different franchise territories. One consisted of fixed-site operations to which dog owners brought their animals for bathing. The locations for these With Aussie Pooch Mobile's approval, some franchisees businesses included retail sites in suburban shopping areas, had developed additional promotional ideas. For example, kennels, and service providers' own homes or garages. The Elaine and Paul Beal wrote informative articles and human second type of competition, which had grown in popularity interest stories about dogs for their local newspaper. When a in recent years, consisted of mobile operations that travelled client's dog died, Elaine sent a sympathy card and presented to customers' homes. the owner with a small tree to plant in memory of the pet. Franchisees also provided a Per Report Card accompanied by With few barriers to entry, there were numerous dog washing a retail promotional Ayer to their clients. services in most maior metropolitan areas. The majority of dog 4 0 51 1 4 1 40 0 18 0 36 1 22 0 178 3 washing services in Australia were believed to be standalone and sold its first franchise in 1996. In 2012, the franchise operations, but there were other franchisors in addition to renamed itself Blue Wheelers and diversified its brand by Aussie Pooch Mobile. Of these, the most significant appeared introducing a new franchise called Dash Dog Wash. While to be Jim's Dogwash and Hydro Dog. the latter only provided a straight dog wash service, Blue Wheelers continued to offer the full range of dog washing and grooming services. By 2015, Blue Wheelers had 178 JIM'S DOGWASH franchise units across Australia, with one master franchisee operating in Western Australia. Dash Dog Wash was still One of Australia's best-known locally developed franchisors in the "puppy" stage of development with only three units was the Melbourne-based Jim's Group, which described operating. The distribution of franchise units across both itself as a company providing quality mobile grooming and franchises was broken down as follows: care for dogs throughout Australia and New Zealand. The company had originated with a mowing service started by Sfate teritory Blue Wheelers | Dashi Dog Wash Jim Penman in Melbourne in 1982 when he abandoned ideas ACT of an academic career after his PhD thesis was rejected. In New South Wales 1989, Penman began franchising the service, known as Jim's Northern Territory Mowing, as a way to facilitate expansion. The business grew rapidly, using master franchisees in different regions to recruit Queensland South Australia 0 and manage individual franchisees. Over the following years, an array of other home-related services were launched under Tasmania 3 the Jim's brand, including Jim's Fencing, Jim's Pool Care, Victoria Jim's Cleaning, Jim's Bookkeeping, and Jim's Car Detailing. Western Australia Total Jim's Dogwash made its debut in 1996, employing a bright red, fully enclosed trailer emblazoned with a logo that showed A new Hydrodog franchise unit cost $24,950 (including Jim with a dog. It had 57 franchises in Australia and two GST) in 2002, of which $10,800 was accounted for by the franchisees in New Zealand. Jim's expansion strategy had been initial franchise fee for a 10,000-home territory. By 2011, the achieved in part by creating smaller territories than Aussie franchise fee had increased to $41,950 plus GST; this included Pooch Mobile and pricing them relatively inexpensively in the trailer, equipment, launch promotions, and everything order to stimulate the recruitment of new franchisees. a franchisee needed to start their business. The territory size had also changed, with a minimum of 5,000 homes, although A territory, typically encompassing about 6,000 residences, most territories included more than that number and were sold from $13,000 up to $19,000 (including GST). A trailer based on a designated suburb. By 2015, the Blue Wheelers could be purchased for $18,500 or rented at $400 per month franchise fee was $46,990 based on a minimum of 5,000 (both including GST). Ongoing franchise fees included a homes. The Dash Dog Wash franchise fee was $29,990 based Alat monthly royalty (rather than royalties being calculated on 10,000 homes. On average, the company washed about on a percentage of sales) of $438; an advertising levy, also set 45,000 dogs per month, with average earnings per franchisee as a flat monthly fee of $165; and a $7 per lead fee (all the between $1,100 and $2,500 per week. figures include GST). Jim's fee for washing and blow drying averaged $65 per dog. In recent years, Jim's Dogwash started Blue Wheeler's dog grooming services, which included blow offering aromatherapy and also sold pet food and accessories. drying, ranged in price from $35 to $90. In addition to their dog grooming services, franchisees sold dog food products (including dry biscuits and processed meats such as pork, chicken, BLUE WHEELERS beef, or kangaroo) as well as dog toys and other accessories. They did not offer aromatherapy, facials, or massages. Both Another franchised dog washing operation was Blue franchises charged franchisees a flat management fee instead Wheelers (formerly Hydrodog), based on the Gold Coast of a royalty: $140 (+GST) per week for Dash Dog Wash and in Queensland. Hydrodog commenced operations in 1994 $175 (+GST) per week for Blue Wheelers. w a CASE STU DEVELOPING A STRATEGY OF that English people traditionally washed their dogs very GROWTH FOR THE FUTURE infrequently, often as liccle as once every two to three years. However, once they had tried The Pooch Mobile, they quickly For the directors of Aussie Pooch Mobile, managing continued became monthly clients, primarily for the hygiene benefits. expansion presented an ongoing challenge. However, as Christine Taylor pointed out, You can be the largest but In 2004, the regional master franchisee from the Gold Coast you may not be the best. Our focus is on doing a great job in Queensland moved to Denver, Colorado, to open The and making our franchisees successful." Pooch Mobile in the United States. The Pooch Mobile has since expanded to Las Vegas and Hawaii. The United States To facilitate expansion outside its original base of southeast market is strong, and dog owners have readily embraced the Queensland, Aussie Pooch Mobile appointed a franchise sales dog washing concept. manager in Sydney for the New South Wales market and another in Melbourne for both Victoria and South Australia. As the company grew, the directors knew it was likely to face One question was whether to adopt a formal strategy of increased competition from other providers of dog washing appointing master franchisees. Currently, there are master services. However, as one successful franchisee remarked, franchises in Queensland (Gold Coast), New South Wales "Competition keeps us on our tocs. It's hard being in the (Wollongong and Campbelltown), and Western Australia. lead and maintaining the lead if you haven't got anybody on your tail." In addition, Taylor had long been attracted by the idea of expanding internationally. In 1996, the company had licensed a franchisce in New Zealand to operate a subsidiary named Kiwi STUDY QUESTIONS Pooch Mobile. However, there was only one unit operating by early 2002, and Taylor wondered how best to increase 1. How did Christine Taylor succeed in evolving the local this number. Another subsidiary had been established as a 1 dog washing service she developed as a teenager into an master franchise in the French province of New Caledonia, international franchise business? a large island northeast of Australia. Launched in late 2000 2. Compare and contrast the tasks involved in recruiting under the name of La Pooch Mobile, it had one unit. A third new customers and new franchisees. master franchise territory had been established in Malaysia in late 2001, and there were two units operating by 2002. 3. From a franchisee's perspective, what is the advantage of belonging to the Aussic Pooch Mobile franchise rather In 2001, Aussie Pooch Mobile had granted exclusive rights for than working alone? operation in the United Kingdom to a British entrepreneur who 4. In planning for future expansion, how should Christine operated under the name The Pooch Mobile. Thus far, twelve Taylor evaluate the market potential of Australia versus units were operating in the English county of Lincolnshire, that of overseas countries? What strategies do you 200 km (125 miles) north of London. This individual nored recommend, and why